Inventory Shortages - Setup
1. Setup the quantity to order for Inventory Shortages
The first step in setting up the system to process Inventory Shortages is to enable a System Configuration setting that will determine how you want to calculate reorder quantities.
- Navigate to Administration ➤ System Configuration.
- Select Product from the drop-down list and look for the Inventory Shortages Order Qty setting.
- Double-click the Value column to choose your option. (See next screenshot.)
- Reorder Quantity: You can indicate a fixed quantity (per Product) that will be reordered when the Product qualifies for Inventory Shortages processing.
- Max Qty less Qty On Hand: AV will calculate the quantity to order based on the Maximum Stock quantity indicated on the Product record.
- Use a script: If you have a unique way of calculating your reorder quantities, you can have AcctVantage Professional Services write a script to integrate your logic.
2. Setup your Products for Inventory Shortages
For Inventory Shortages to be processed for a given Product, go to the Product record > Inventory tab:
- Check the Include in Inventory Shortages box.
- Specify a Minimum and Maximum Stock Level.
- Alternatively, you can set the MRP Auto Min/Max Stock Multipliers and the system will auto-calculate the Min/Max Stock values based on the Average Monthly Usage.
- Also, specify a Reorder Quantity, Lead Time and Rush Lead Time.
- Indicate a Primary Vendor on the Product Info tab of the Product record.
How AcctVantage determines if a shortage exists:
If you've set up a Product for inclusion in Inventory Shortages using the steps found here, then AcctVantage will evaluate each Product's current inventory situation.
- The MRP system compares the Minimum Stock Level to the Quantity Available plus the Quantity on outstanding Purchase Orders for the indicated Warehouse minus those Purchase Orders already associated with Backorders. If the Minimum Stock Level is greater than the sum of this calculation, then the Product is included in Inventory Shortages.
That description of the calculation can get confusing, so let's look at a couple examples assuming the Minimum Stock Level = 5:
- Qty Available = 3 and there is no other activity for the Product. The Product DOES qualify for Inventory Shortages because the Qty Available is less than the Minimum Stock Level (3 < 5).
- Qty Available = 7 and there is no other activity for the Product. The Product DOES NOT qualify for Inventory Shortages because the Qty Available is greater than the Minimum Stock Level (7 > 5).
- Qty Available = 3 and there are 10 units on open Purchase Orders. The Product DOES NOT qualify for Inventory Shortages because the Qty Available + Qty On PO is greater than the Minimum Stock Level [(3 + 10) > 5].
- Qty Available = 3 and there are 10 units on open Purchase Orders, all 10 of which are linked to Back Orders. The Product DOES qualify for Inventory Shortages because the Qty Available + Qty On PO - PO for Backorders is less than the Minimum Stock Level [(3 + 10 - 10) < 5].